Let us clarify here that the grey market is an unofficial market where interested traders can bid and offer shares of a forthcoming IPO. These are not actual shares of the IPO but something like unofficial forwards on the shares. Since it is not an official market, it is not under the purview of SEBI regulation. This is a self regulated market and runs on trust. But it is useful only as an indication of the demand appetite and the likely pricing of the IPO.

Who all look at the grey market price for information? For retail investors the grey market price is indicative of the post listing performance. For HNI investors, it gives them an indication of the appetite for the stock and helps them to decide how much to apply for in the IPO. For IPO financiers, it gives them an idea of whether financing the IPO can be a lucrative business proposition or not.